Trump backtracks on Hormuz 20% toll demand

President Trump on Tuesday walked back his demand for collecting a 20% toll from ships that transit through the strait of Hormuz — and instead said Gulf states would make major investments in the U.S.

Why it matters: Trump's Hormuz fee announcement on Monday was deemed illegal by the UN maritime agency and shocked many U.S. allies in the Gulf. It also validated the Iranian demand to collect service fees in the strait — something Trump himself rejected until several days ago.

What he is saying: "Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States," Trump wrote on Truth Social.

Behind the scenes: Two Gulf officials said Trump's tolls announcement on Monday caught countries in the region by surprise.

• Officials from several Gulf countries asked their White House counterparts for clarifications, the sources said.
• On Tuesday, Trump spoke to Qatari Emir Sheikh Tamim bin Hamad Al Thani to express his condolences for the death of his father. The issue of the strait of Hormuz also came up in the call.

Reality check: Before the war with Iran, Saudi Arabia, Qatar, the UAE and Bahrain had already committed to invest more than $2 trillion in the U.S. over the next several years.

• Trump said in his post that the Gulf countries will make "new Investments" that "will make that Number even larger."

State of play: Trump made his comments several hours before a U.S. naval blockade on Iran comes into effect, and amid exchanges of fire between the U.S. and Iran in the strait of Hormuz for the fourth day in a row.

• "The Strait of Hormuz is open to ALL Ship traffic except for Iran — and that is because of their lying, violent, malicious leadership, which is taking them down the path of TOTAL DESTRUCTION," Trump wrote.